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Notes Payable
9 Months Ended
Sep. 30, 2011
Notes Payable [Abstract] 
Notes Payable

6.    Notes Payable

Revolving Credit Agreement

In September 2011 the Company requested and received a one-time reduction in the agreement's consolidated tangible net worth covenant from $10,000 to $9,550 as of September 30, 2011. The Company requested this temporary reduction due to the imminent decision in the binding arbitration of an E&I construction contract dispute. The arbitration was subsequently decided in the Company's favor. The Company met this covenant as of September 30, 2011 under both the original and reduced amount.

 

On July 27, 2011, the Company amended its revolving credit agreement with JP Morgan. Under the terms of the amendment, all borrowings will bear interest at the 30 day LIBOR rate (0.23% at September 30, 2011) plus 3.25% per annum with a maturity date of July 1, 2013.

As of September 30, 2011, $5,000 was borrowed under the agreement and there was additional borrowings available based on the Company's borrowing base of $1,440.

On March 28, 2011, the Company amended its revolving credit agreement with JP Morgan with an effective date of December 31, 2010. As amended, the bank provides the Company with a revolving credit line not to exceed the lesser of $10,000 or the sum of (i) 80% of eligible accounts receivable and (ii) 40% of the eligible inventory up to an amount not to exceed $1,000, less (iii) $75.

The agreement is collateralized by the Company's real estate in Houston and Beaumont, Texas, trade accounts receivable, equipment, inventories, and work-in-process. Our subsidiaries are guarantors of the borrowings.

Under the agreement, the Company pays a commitment fee of 0.3% of the unused portion of the credit limit each quarter. Additionally, the terms of the agreement contain covenants which provide for customary restrictions and limitations, the maintenance of certain financial ratios, including maintenance of a minimum current ratio, leverage ratio and tangible net worth and restriction from paying dividends without prior written consent of the bank. The maximum borrowing amount under the agreement shall not exceed $6,000 in the event that "adjusted net income" is less than $1.00 at any quarter. Adjusted net income is defined as operating income plus depreciation and amortization.